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Bill OK’d to ease health cost load

By Sean P. Murphy
Globe Staff / May 29, 2010

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A plan giving cities and towns more control over the rapidly escalating costs of health care benefits narrowly passed the state Senate yesterday, a step toward reforming a system that local officials say is breaking their budgets.

The proposal, if passed by the full Legislature and signed by the governor, would change state law to allow municipalities to shift, without union negotiations, some of the cost of health care insurance from taxpayers to municipal employees, elected officials, and retirees.

That has become the highest priority of the Massachusetts Municipal Association, a lobby that represents the state’s 351 cities and towns. Mayors and other municipal leaders say they are so intent on getting relief from the high cost of health care that they will launch a ballot initiative for 2012 to change the law if the state Legislature does not.

Organized labor, however, has resisted such a shift, insisting that health plan changes be negotiated at the bargaining table.

The plan was approved by the Senate, 20-17, as an amendment to next year’s $28.4 billion budget, which passed early yesterday after two long days of debate. It is meant as a delicate compromise between the interests of municipal leaders and the unions that represent teachers, firefighters, and other municipal workers, who say it is unfair for legislators to tamper with long-recognized rights to collective bargaining.

“It’s a fair compromise that will allow for shared savings that will help employees in the cities and towns,’’ said Steven C. Panagiotakos, chairman of the Ways and Means Committee, the measure’s main sponsor.

But both sides weighed in with criticism.

“Cities and towns are in financial crisis and any plan from the Legislature must guarantee them a greater amount of the savings,’’ said Geoffrey C. Beckwith, executive director of the Massachusetts Municipal Association.

“Outrageous, unbelievable, and shocking,’’ said Robert B. McCarthy, president of the Professional Firefighters of Massachusetts. “It allows management the authority to basically do whatever they please,’’ he said. “It gives them the unilateral authority to break every signed agreement that labor has negotiated in good faith.’’

State Senator Marc R. Pacheco, Democrat of Taunton, voted against the amendment.

“It’s a continuation of cost-shifting to average working people in the cities and towns,’’ he said. “And it has a big impact on them and their families.’’

The Globe reported in February that health care costs added more than $1 billion to municipal budgets from 2001 to 2008, with many communities providing unusually generous benefits to employees, retirees, and elected officials.

The Senate measure made it to the floor after closed-door negotiations over a compromise among a group of mayors and union representatives hit an impasse earlier this week.

Municipal leaders want the power to increase copayments and deductibles for employees, elected officials, and retirees to help balance their budgets. Cities and towns pay as much as 85 percent of total premiums, while requiring as little as $5 in copayments for medical appointments. But state law currently prohibits making changes without bargaining with unions.

Increasing copayments and deductibles would probably lower total premiums, and how to divide that expected savings have been a sticking point in the negotiations.

Panagiotakos’s plan would give 25 percent of the savings each to the municipalities and to employees, elected officials, and retirees, to be used toward their share of health care costs. It would let the two sides negotiate over the remaining 50 percent. In the event of impasse, the matter would go to binding arbitration.

The House has already passed its budget, so the health care amendment, along with other aspects of the Senate proposal, must now go to a committee of lawmakers from both chambers, who will negotiate a final spending plan.

In another closely watched budget amendment, the Senate voted, 25-12, to eliminate two holidays now reserved for public employees who work in Suffolk County. The holidays — Bunker Hill Day in June and Evacuation Day in March — give an additional two paid days off to roughly 35,000 workers.

State Senator Michael R. Knapik, a Westfield Republican, sponsored the amendment.

“It’s an offense to the hardworking taxpayers of Massachusetts,’’ he said.

Martin Finucane of the Globe staff contributed to this report. Sean Murphy can be reached at smurphy@globe.com.

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